Posts tagged ‘shippers’

2020: a term that implies clarity of vision. And the 6th AnnualPlatts Mediterranean Bunker Fuel Conference held in Athens last week certainly featured numerous speakers seeming to claim 20/20 vision on 2020. Yet by the end of the conference I found my own vision to be distinctly blurry.

As the shipping industry continues to assess the likely impact of the International Maritime Organization’s new 0.5% sulfur cap in 2020, the conversation has started to move on to what other organizations can do to enforce it.

The IMO decided in October last year to cut the global marine fuel sulfur limit to 0.5% at the start of 2020 from 3.5%. The change will be an expensive one for ship owners and operators, and the financial incentive to ignore the new sulfur cap where possible will be strong.

The shipping industry looks set to be shaken up by the International Maritime Organization’s decision to cut global bunker sulfur limits to 0.5% in 2020. Most operators will be forced to buy cleaner, more expensive fuels, raising their bills considerably, but that doesn’t mean consumers will endure similarly high prices.

It looks set to be a highly disruptive change for shipping, as each company competes for customers by holding to as small a rise in costs as they can get away with. But a closer look at those costs shows the impact felt by consumers may be limited.

Approximately 90% of the world’s trade travels by sea and one would expect the industry’s supply chain to be the height of modernity by adopting disruptive technology and strategies. However, this could not be further from the truth. While online trading platforms are under development, the traditionalism of the industry prevails with various parties involved in each voyage, typically communicating via trade managers.

A surge in Libyan oil exports — production has increased sharply in the past few months, jumping to four-year highs of over 1 million b/d this month — is seeing more and more oil tankers travel to and from the North African country’s key oil terminals, increasing tanker activity and pushing up freight rates in the Mediterranean. So far, so good for shipowners.

But as more tankers call at Libyan ports, something which they were happy to avoid altogether less than a year ago, they can find themselves being drawn into the role of unlikely — and possibly begrudging — humanitarians.

An eye-catching fixture was seen recently that gave a glimpse of the dirty side of clean tankers. The Medium Range tanker Iver Experience was reported to be on subjects to Lukoil to load a a 38,000 mt cargo of diesel oil on the US Gulf Coast and then head across the Atlantic.

That doesn’t seem out of line, but the freight rate for that deal was Worldscale 85, or $11.72/mt, when that route was sitting at w102.5, $14.13/mt.

Now, if someone, who was long considered dead is suddenly walking around, it is not necessarily a miracle of biblical proportions. So before you raise your hands in joyful prayer for the holy revenant, make sure he’s not shambling, growling and craving for brains, as you might be looking at a zombie.

Let’s take an example of a shipping market that kicked the bucket all the way back in 2008 after being run over by the steamroller of tonnage oversupply and the global economic downturn.

Take a seat, Nostradamus: I’ve got some news. To quote the rock band REM, it’s the end of the world as we know it.

Like the recent gatherings preceding it, speaker after speaker at the Platts 5th Annual Mediterranean Bunker Fuel Conference in Athens last week discussed the ifs, whats and hows of the impending little shipping apocalypse.